Cherry Lopez runs the Wear Forever Store which sells ladies' wear. She carries charge accounts for a few customers. To encourage prompt payments she offers cash discount of 2/10, n/30 FOB Shipping Point. She invested on January merchandise worth P200,000.-. She clso invested P500,000.- cash of which P400,000- was deposited with Citibank for the account of the business. A 12 VAT is included in all sales (exclusive), and purchases (inclusive) and a s Expanded Withholding Tax for rent. All payments above P5,000 are made by checks. The following are the transactions for the month of JanuaryJanuary2 Issued a Check 101 for rent deposit P23,000.- under Check Voucher No. 1001.3 Purchased merchandise from Iloilo Weavers 44,000 Terms: 2/10, 1/30 with Freight Prepaid of 3,200 FOB Shipping Point4 Purchased merchandise from Folks Wear P37.345. Terms 2/10, 1/15, 1/30 FOB Shipping Point.5Paid cash for freight of Folks Wear shipment P2,2306 Sold merchandise on account to Sari Store P80,360. Freight collect. FOB Shipping Point7 Returned merchandise purchased from Folks Wear P1,496 11 Issued check voucher 1002 & check no. 103 in payment of the Iloilo account 14 Summary of cash sales 116.225 inclusive of VAT OR. No. 2001 was immediately deposited. FOB Shipping Point15 Paid in cash the salaries of employees 14,000.-less withholding tax16 Issued check no. 103 under check voucher 1003 in payment of Folks Wear account17 Received cash in full of Sari account and issued O.R. No. 2002. This was immediately deposited with Citibank.18 Sold merchandise for cash P38,225 exclusive of VAT and issued O.R. No. 2003. FOB Shipping Point19Cash refund to customers P1,127.50 inclusive of VAT for defective merchandise.20 Sold merchandise on account to Robinsons P34,760.- exclusive of VAT with Prepaid Freight of 1,430.- FOB Shipping Point21 Sold merchandise to Citibank credit cardholders P8,745.- exclusive of VAT. (Considered as cash sales. Use Cash in Bank account.)22 Issued credit memo to Robinsons for merchandise returned P4,576.-(inclusive of VAT)23 Service fee charged by Citibank P262.50.24 Paid for water bills P2,000.- and electric bill P3,650.-25 Paid in cash salaries of employees P20,000.- less 5% withholding tax, 3% SSS, 1.5% Philhealth, & 2% Pag-ibig.28 Issued check no. 104 under check voucher 1004 in payment for rent 15,000​

Key Journal EntriesJan 2 – Rent deposit (Ck 101, CV 1001): Dr. Rent Deposit 23,000  Cr. Cash 23,000Jan 3 – Purchases from Iloilo Weavers, ₱44,000 (2/10, n/30), Freight Prepaid ₱3,200, FOB SP:Purchases are VAT-inclusive → Net of VAT = 44,000 / 1.12 = 39,285.71; Input VAT = 4,714.29 Dr. Purchases 39,285.71 Dr. Input VAT 4,714.29  Cr. Accounts Payable – Iloilo 44,000 (Record freight prepaid by vendor; no entry yet since prepaid by vendor. If billed later, recognize Freight-in.)Jan 4 – Purchases from Folks Wear ₱37,345 (2/10, 1/15, 1/30) FOB SP: VAT-inclusive → Net 33,344.64; Input VAT 4,000.36 Dr. Purchases 33,344.64 Dr. Input VAT 4,000.36  Cr. A/P – Folks Wear 37,345Jan 5 – Freight on Folks Wear (cash) ₱2,230: Dr. Freight-in 2,230  Cr. Cash 2,230Jan 6 – Credit sale to Sari Store ₱80,360 (VAT-exclusive), Freight collect, FOB SP: Output VAT = 9,643.20 Dr. A/R – Sari Store 90,003.20  Cr. Sales 80,360  Cr. Output VAT 9,643.20 (Freight collect: customer pays carrier → no freight expense recorded.)Jan 7 – Purchase return to Folks Wear ₱1,496 (VAT-inclusive): Net 1,335.71; Input VAT 160.29 Dr. A/P – Folks Wear 1,496  Cr. Purchase Returns & Allowances 1,335.71  Cr. Input VAT 160.29Jan 11 – Payment to Iloilo (within discount): Gross 44,000; 2% discount = 880 → Payment 43,120 Allocate VAT and purchases proportionately: Dr. A/P – Iloilo 44,000  Cr. Cash 43,120  Cr. Purchase Discounts 785.71  Cr. Input VAT (reversal on discount) 94.29Jan 14 – Cash sales ₱116,225 VAT-inclusive (OR 2001; deposited): Sales = 116,225 / 1.12 = 103,776.79; Output VAT = 12,448.21 Dr. Cash in Bank 116,225  Cr. Sales 103,776.79  Cr. Output VAT 12,448.21Jan 15 – Salaries ₱14,000 less withholding tax (assume 10% as placeholder if unspecified): (If only “less withholding tax” with no rate, record net pay and taxes payable.) Example at 10%: Dr. Salaries Expense 14,000  Cr. Withholding Taxes Payable 1,400  Cr. Cash 12,600Jan 16 – Pay Folks Wear (within discount): A/P after return = 37,345 − 1,496 = 35,849 Discount 2% (within term 2/10,1/15,1/30 assumed day 12 still 1%? If Jan 4 to Jan 16 → 12 days: term “2/10, 1/15, 1/30” means 2% ≤ Day 10, 1% ≤ Day 15, else net by Day 30. On Day 12 → 1% discount.) Discount = 358.49; Payment = 35,490.51 Adjust Input VAT for discount portion 1% of VAT-inclusive: VAT reduction = 1% × 4,000.36 ≈ 40.00; remainder to Purchase Discounts. Dr. A/P – Folks Wear 35,849.00  Cr. Cash 35,490.51  Cr. Purchase Discounts 318.49  Cr. Input VAT 40.00Jan 17 – Collection from Sari Store (OR 2002; deposited): Dr. Cash in Bank 90,003.20  Cr. A/R – Sari Store 90,003.20Jan 18 – Cash sales ₱38,225 (VAT-exclusive): Output VAT = 4,587.00 Dr. Cash in Bank 42,812.00  Cr. Sales 38,225.00  Cr. Output VAT 4,587.00Jan 19 – Cash refund to customers ₱1,127.50 VAT-inclusive: Sales Return = 1,127.50 / 1.12 = 1,006.70; Output VAT 120.80 Dr. Sales Returns & Allowances 1,006.70 Dr. Output VAT 120.80  Cr. Cash 1,127.50Jan 20 – Credit sale to Robinsons ₱34,760 (VAT-exclusive) + Prepaid Freight ₱1,430, FOB SP: Output VAT = 4,171.20; Freight expense (seller prepaid). Dr. A/R – Robinsons 38,931.20  Cr. Sales 34,760.00  Cr. Output VAT 4,171.20 Dr. Freight-out (Delivery Expense) 1,430  Cr. Cash 1,430Jan 21 – Citibank credit card sales ₱8,745 (VAT-exclusive): Output VAT = 1,049.40 Dr. Cash in Bank 9,794.40  Cr. Sales 8,745.00  Cr. Output VAT 1,049.40Jan 22 – Credit memo to Robinsons for returns ₱4,576 (VAT-inclusive): Sales Return = 4,576 / 1.12 = 4,085.71; VAT 490.29 Dr. Sales Returns & Allowances 4,085.71 Dr. Output VAT 490.29  Cr. A/R – Robinsons 4,576.00Jan 23 – Citibank service fee ₱262.50: Dr. Bank Charges / Credit Card Fee 262.50  Cr. Cash in Bank 262.50Jan 24 – Utilities paid (water ₱2,000, electric ₱3,650): Dr. Utilities Expense 5,650  Cr. Cash 5,650Jan 25 – Salaries ₱20,000 less 5% WHT, 3% SSS, 1.5% PhilHealth, 2% Pag-IBIG: Withholdings: WHT 1,000; SSS 600; PhilHealth 300; Pag-IBIG 400 → Net ₱17,700 Dr. Salaries Expense 20,000  Cr. WHT Payable 1,000  Cr. SSS Payable 600  Cr. PhilHealth Payable 300  Cr. Pag-IBIG Payable 400  Cr. Cash 17,700Jan 28 – Rent payment (Ck 104, CV 1004) ₱15,000 with EWT (expanded withholding on rent, rate e.g., 5% assumed): If 5% EWT: Withheld 750; Net cash 14,250 Dr. Rent Expense 15,000  Cr. Cash 14,250  Cr. EWT Payable 750

Answered by BrainlyModIsBusy | 2025-08-22